U.S. tariffs may reduce India’s FY26 real GDP growth by 0.3%.

US Tariffs to Impact India’s GDP Growth

• Forecasts suggest that US tariffs will reduce India’s GDP growth by 0.2% to 0.4% for fiscal 2026.

• The Bank of Baroda and Barclays have trimmed estimates of inflation adjusted GDP growth rate to 6.6% and 6.5% respectively.

• The real GDP for India would have been ₹200.7 lakh crore, but the tariff effect would reduce this to ₹200.3 lakh crore.

• The effect of the tariffs is expected to be caused by exchange rate volatility and largely affect the whole sale price index (WPI) inflation.

• Elara Securities predicts RBI to cut rates by 50 basis points in FY26.

• The Ministry of Commerce assures that options are being examined and economists express the possibility of negotiations with the U.S. to mitigate risks from tariffs.

• The tariffs are expected to hit 9-11% of India’s exports to the U.S., including electronics, precious stones, machinery, and readymade garments.

• The tariffs would also impact company earnings in India as export turnovers can reduce and companies might have to cut prices for a competitive edge.